Budget 2018

What it means for your business

How will the Budget 2018 announcement affect your business? Read more about what’s been released in the latest statement.

The Chancellor’s latest Budget contained important announcements for businesses up and down the country.

Our experts have analysed the statement and provided their thoughts on the impact the measures could have.

Depending on the outcome of Brexit negotiations, the Chancellor has warned that a full Budget announcement could be required next spring, when new measures or changes to existing rules may be introduced.

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  • UK overview

    Ian Workman, Co-Head of SME, Barclays

    There were some real positives in the Chancellor’s Budget. One of the most significant is the cut in business rates for retail premises with a rateable value of £51,000 or less. These bills will be reduced by a third for a period of two years from April 2019, affecting up to 90% of all retail properties.

    It was also great to see the reduction in the apprenticeship levy for small businesses, which is being cut from 10% to 5%. This increases profitability, and is one of several signs that the Treasury is listening to businesses. It represents a good sign for the future.

    Many smaller businesses will also be relieved that the VAT registration threshold is being frozen at £85,000, rather than being cut, while the Chancellor also said the UK Export Finance’s direct lending facility would be increased by up to £2bn to support British exports.

    Another new initiative – this time to support our environment – is a new tax on plastic packaging that contains less than 30% recycled material. There will be a consultation on the detail and implementation timetable, but this will encourage manufacturers to think creatively and provide new opportunities in the supply chain for green innovation.

    The news that the National Living Wage will increase from April 2019 will be one of the measures that is perhaps less well received by businesses. It will place an extra burden on some, although for employees earning the minimum wage it’s undoubtedly a positive announcement.

    The spending commitments for infrastructure are a real boon and something that the construction industry is likely to benefit from. The government is increasing the National Productivity Investment Fund from £31bn to £37bn, and part of that will see the Transforming Cities Fund extended too.

    It’s clear that the government is thinking hard about how to increase productivity. By improving infrastructure, the hope is that productivity gains follow. It’s important to realise that most business in the UK is still done within the UK, so a good infrastructure is very important.

    And it was really encouraging to hear the Chancellor talk about firing up the Northern Powerhouse and fuelling the Midlands Engine. Barclays has regional growth funds in both the North and the Midlands, and we’re looking to extend this to other parts of the UK.

    Overall, it was a positive Budget for UK businesses, although they could also do with more certainty to encourage them to invest. But with so much spending being directed towards growth and export initiatives, now is the time for businesses to grasp new opportunities and look to the future.

  • Real estate

    Matt Weaver, Head of Business Banking Real Estate, Barclays

    There were quite a few announcements in this year’s Budget that could prove particularly interesting to the real estate sector, with the Chancellor looking to give housebuilding a boost.

    One of the measures announced was an extra £500m being provided for the Housing Infrastructure Fund, while 13,000 new homes are to be built through the next wave of a strategic partnership with nine housing associations. And of particular interest to smaller businesses will be the news that the British Business Bank will provide up to £1bn in guarantees to support the revival of SME housebuilders.

    The Chancellor also confirmed that Entrepreneurs’ Relief is being retained, and that’s great news for some of our housebuilders.

    The government’s announcement of a Future High Streets Fund will have sparked interest among many property developers. It will provide £675m of co-funding to help councils transform high streets, including facilitating the redevelopment of under-used retail and commercial areas into residential. Councils haven’t had this power before, so it’s a good move.

    So, there are plenty of positive things in this Budget for the real estate sector. This has been a good Budget overall.

  • Fast growth

    Juliet Rogan, Co-Head of High Growth and Entrepreneurs, Barclays

    This was another Budget that, in many ways, keeps high-growth businesses on the agenda. The government recognises the importance of high tech businesses to its overall strategy, and that shows in many of the measures that were announced.

    The Chancellor said there would be another £1.6bn of new investments in the Modern Industrial Strategy, which is targeted at high tech areas such as artificial intelligence, nuclear fusion and quantum computing. It’s really important that we recognise the evolving nature of companies and technology within the UK, so this is positive.

    Entrepreneurs’ Relief is being retained, although the qualifying period is doubling from 12 months to two years. Entrepreneurs have got a great track record of investing in their own businesses and the ecosystem around them, so it is great to see this investment is still being encouraged.

    Extending start-up loan funding until 2021 represents more positive news for those looking to start new businesses.

    Our entrepreneurial ecosystem is stronger than ever in the UK and the projects that Barclays is working on alongside the government will help us to maintain our position as a world leader in high-growth businesses.

  • Agriculture

    Oliver McEntyre, National Agriculture Strategy Director, Barclays

    This was a positive Budget for agriculture, especially with the changes to the annual investment allowance. This is increasing from £200,000 to £1m for two years, and will be particularly welcome by the capital intensive sectors like root crops or fruit, or those who have been musing over a large scale investment in infrastructure.

    Whilst any investment needs to be undertaken within a long-term business strategy and have profitability and efficiency at its core, this increase in allowance may well be the final encouragement some businesses need to press on with a long-term investment project.

    This is a real good news story. If you’re considering a big capital investment, there’s an added incentive to do it. It’s a very positive change that will benefit the sector, and will be welcomed by the supply chain and processors too.

    The announcement that the government will invest £12m over the next three years in fisheries technology and safety measures is another boost. While in the context of some of the other figures in the Budget it doesn’t seem huge, I’m sure it will be welcomed by the sector.

    Of course, the increase in the National Living Wage, while great news for workers, might pose some challenges for labour intensive sectors, especially around harvest time. The challenge for these businesses is to think about how to work smarter to make that margin back.

Barclays does not provide financial, legal or tax advice. Accordingly, nothing contained within this article should be construed as constituting legal, financial or tax advice to either you (as the employer) or your employees. Tax rules and legislation can change and the benefits and drawbacks of a particular tax treatment will vary with individual circumstances. We recommend that you, as the employer, take professional advice where required. Both you and your employees have sole responsibility for the management of your respective tax, financial and legal affairs, including making any applicable filings and payments and complying with any applicable laws and regulations.

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